Oil prices are stuck in a consolidation as US-Iran negotiations keep the market on edge

FUNDAMENTAL
OVERVIEW

Crude oil continues to
consolidate between key technical levels as traders await new developments from
the US-Iran negotiations. Yesterday, Iran’s atomic energy chief said that Iran
would be open to dilute its highly enriched uranium if the United States lifted
all sanctions.

The rangebound price action
is clearly showing indecision in the market as the focus remains on the
geopolitical risk. Nonetheless, the macro backdrop has also been supporting
higher oil prices.

In fact, OPEC+ continues to
hold output steady, and demand is expected to improve as last year’s
uncertainty fades. This should continue to support the oil market unless we get
more output hikes or the market starts to bet on Fed’s rate hikes.

CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME

On the daily chart, we can
see that crude oil is consolidating between the 66.43 and 62.35 levels as
negotiations between US and Iran continue. There’s not much we can glean from
this timeframe, so we need to zoom in to see some more details.

CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME

On the 4 hour chart, we can
see an upward trendline defining the bullish momentum. The recent price action
has also formed what looks like a symmetrical triangle. This is a neutral
pattern, and the price can break out on either side. The buyers will likely
continue to lean on the upward trendline to keep pushing into new highs, while
the sellers will keep on stepping in around the downward trendline to target a
breakout to the downside.

CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME

On the 1 hour chart, we can
see more clearly the choppy price action with no clear levels where to lean on
other than the trendlines. There’s not much we can add here as the buyers will
continue to lean on the upward trendline and wait for a breakout to the upside,
while the sellers will keep on stepping in around the downward trendline and
increase the bearish bets on a downside breakout. The red lines define the average daily range for today.

UPCOMING CATALYSTS

Today we get the US December Retail Sales and the US Employment Cost Index
data. Tomorrow, we have the US NFP report. On Thursday, we get the US Jobless
Claims figures. On Friday, we conclude the week with the US CPI report.